Mar 4 2016

Lawsuits –

On February 19, Piedmont’s City Clerk announced resolution of the second of two lawsuits arising from the excessive cost overruns of the Piedmont Hills Undergrounding District, and the Hampton-Seaview Undergrounding District.  The City recouped $667,000 from over $2 million of excess costs.  The bottom line is that Piedmont’s taxpayers are stuck covering a $1.3 million debacle.

Now it’s over.  It’s time to move on.  We must accept the penalty and see that such gross mismanagement is never repeated again.   True enough.  But there are consequences from this financial fiasco.  Future proposals for tax increases or bond funding for big projects will have to meet higher standards of review.  And if there is any doubt at all about the veracity of new proposals, or the competence of their sponsors, Piedmont’s citizens will probably reject them.  Once bitten, twice shy.

Bruce Joffe, Piedmont Resident
3-4-16

 Editors’ Note:  Opinions expressed are those of the author.
Feb 23 2016

I estimate that taxpayer expenditures total $1,806,845   (taxpayer cost estimate updated on Feb. 26, 2016 to $1,640,000 -see comment below) directly related to the Piedmont Hills Undergrounding District (“PHUD”). This is public money for private benefit as Appeal Courts have found in other cases. As litigation is concluded, it seems appropriate to close the undergrounding debacle with transparency and not bury it in bedrock. I base my total on the following direct expenses and credits:

  •  Nov. 16, 2009, taxpayer cost to repair Crest Road: $275,000
  • Dec. 12, 2009, Council gives $1,004,832
  • Feb. 6, 2010, Council gives $1,127,013
  • Litigation expense up to Sept. 30, 2012 is $118,739
  • I estimate additional litigation cost at $298,260 to Feb. 2016.

I put a letter in to City Council asking for the total litigation cost with no response. I speculate the $417,000 Harris settlement covers litigation cost. Credits include $917,000 litigation settlements and PHUD offered to contribute $100,000.

$616,491.50 cost for another private underground district –

Additionally there is $300,000 in City litigation cost plus $316,491.50 settlement cost for $616,491.50 total taxpayer expense for the neighboring Sea View Undergrounding District that fortunately did not go forward. How many millions more would we have spent excavating bedrock next to PHUD had Bert and Deborah Kurtin not brought suit to stop that District?

A Feb. 6, 2010, City Council Resolution states: “WHEREAS, while the City Council requests that any funds expended by the City for completion of the construction project that are not recovered from legal actions against responsible parties be contributed by residents of the District.”

There is no action on or acknowledgement of this resolution.

This June a 30% higher parcel tax will be put before voters.

Rick Schiller, Piedmont Resident

Editors’ Note: Opinions expressed are those of the author.
Feb 22 2016

City regains $917,000 out of over $2 million – 

Over 5 years ago, City Council members were suddenly informed about construction cost overruns for installation of underground utilities in the private utility district known as the Piedmont Hills Underground Assessment District.

To complete the underground work and litigate the matter cost the City was well over $2 million.  The final cost arising from the problem is not known at this publishing.

The City brought litigation against two engineering firms, Robert Gray and Associates and Harris and Associates, who were responsible for the underground project design work.  Settlement with Gray was $500,000 and combined with the $417,000 Harris settlement equals $917,000. 

The City in approving the private utility district contracts assumed the project risks for the private project, which proved to be financially consequential.  The plans had not indicated the large amount of rock encounter in the excavations resulting in significant additional cost to complete the project. Various individuals and entities were considered to be potentially culpable in the matter.  Known legal action was taken only against Gray and Harris.

Press release from City:

City Announces Settlement with Harris & Associates

At its regular meeting of February 16, 2016, the City Council approved a settlement agreement with Harris & Associates, the second of two engineering firms that the City had sued to recover costs associated with the Piedmont Hills Underground Assessment District. The City previously settled with the other engineering firm, Robert Gray & Associates.

The City filed suit against engineering firm Harris & Associates in April 2011, alleging causes of action for both breach of contract and professional negligence related to Harris & Associates’ engineering practices. The agreement provides that Harris & Associates will pay the City $417,000 to settle the suit.

“This settlement brings an end to our legal disputes relating to the Piedmont Hills Undergrounding Project, provides the City with partial compensation, and allows the City to put this unfortunate chapter in our history behind us and to focus our attention on Piedmont’s bright future,” said Mayor Margaret Fujioka.

“This settlement is the result of protracted negotiations with Harris & Associates and their attorneys,” said City Attorney Michelle Marchetta Kenyon. “While the attorneys representing us in this case would have worked tirelessly to prevail in a lengthy trial, settling this case best conforms to the City’s long term interests.”

Read the staff report and correspondence on the settlement with Harris & Associates

<<<  To read a full accounting of PCA reporting on the subject, click “Undergrounding”on the left side of this page and scroll down. 

Feb 13 2016

Honoring President’s Day and delaying their meeting one day, the City Council will convene on Tuesday, February 16 at 7 p.m. in a Closed Session with legal counsel in the City Hall Conference Room to discuss litigation concerning Harris & Associates, the engineering firm instrumental in the failed and costly private underground utility district.

At 7:30 p.m. the City Council will begin its Open Session in the Council Chambers, with the Consent Calendar:  approve Council liaison assignments, approve catastrophic leave donations for Firefighter David Abernethy, and authorize a settlement with Harris and Associates in the amount $417,000.

Next the Council will take up its regular agenda, including the 2014-15 Audit Report, 2015 Piedmont Crime Report, Police Computer Upgrade in the amount $426,205, Emergency Operations Plan Update, Midyear Fiscal 2015-16 Report, and Midyear Appropriations increasing budgeted expenditures by $964, 250.

The meeting is open to the public, broadcast live.  A copy of the meeting will be retained in the city’s archives.

Read the agenda.

Staff reports:

Council liaison assignments for 2016

Catastrophic leavdonation

Settlement agreement with engineers Harris & Associates

Audit Report

Year End Crime Report

Dispatch Software Purchase

Emergency Operations Plan

Mid-year Financial Report

Mid-year Additional Appropriations 

Jul 3 2015

On Monday, July 6, the Council will consider a full release of all claims against the engineering firm Robert Gray and Associates in exchange for $500,000.

Michelle Kenyon, Piedmont’s City Attorney recommends that the City Council authorize the settlement agreement with Robert Gray and Associates (RGA) in the amount $500,000. The City’s lawsuit originated in 2011 in connection with the Piedmont Hills Undergrounding project.

Agreement with RGA by the City Council is not the final step, as it would still have to be approved by the Superior Court of Contra Costa County.

Read the full report here

The City’s litigation against the additional engineering firm, Harris and Associates will continue.

Jan 4 2015

Arriving in March of 2014 from Astoria, Oregon, Piedmont’s new City Administrator Paul Benoit has put in motion changes to some City procedures, programs, and policies. 

Piedmont’s long forgotten Conflict of Interest Code was updated to include new and well-established staff positions. Additionally, the Police and Fire Pension Board members were added to the list of those covered by the Code.

Elected and appointed officials as well as staff members were presented with a training program on the Brown Act, California’s sunshine law.  Adherence to the Act has been an issue in prior years; yet no program had been presented to inform individuals of their responsibilities such as not acting in private excluding the public and their right to know public business.

City contracts are being more carefully defined and scrutinized. The 2007 contract with a previous City Attorney did not contain a requirement for Errors and Omissions insurance, perhaps a problem when he approved and signed the costly undergrounding contract placing risks on all Piedmont taxpayers rather than property owners in the private project.

Top City employees are now encouraged to attend Council meetings, to provide background information and answer questions about agenda items. 

The Piedmont City Council reached agreement with the Piedmont Center for the Arts for an expanded lease to allow construction of a lift to give disabled users of the Center access to the newly renovated restrooms.

Blair Park has benefited from an expedited safety plan of removing dangerous, diseased Monterey Pines from the park.

Use of the approximate $500,000 in East Bay Regional Park District WW Bonds is on a fast track to assure timely application and use of Piedmont’s entitlement. Hampton Field and surrounds have been designated for safety and cost-saving improvements.

To spare taxpayers additional costs for sanitary sewer improvements, Benoit devised a temporary loan plan utilizing windfall property transfer taxes at essentially no interest to provide needed funds.  An expeditious program to replace poorly functioning pipes is now in place. In 2011 City Hall asked taxpayers for $11 million for the sewer update, later budgeted at a corrected cost of $1 million.

Other policies have changed.  Apartments will be allowed above commercial buildings.  Body cameras will be standard on police officers.  The Bike and Pedestrian Plan was approved.  The Annual Piedmont Turkey Trot will be providing the City of Piedmont Athletic Facilities Preservation Fund with revenue.
Voters approved an election date change to synchronized Piedmont’s election with the State General Election. Public smoking will be further restricted in Piedmont. The revised Housing Element of the General Plan met the State deadline.

Benoit will be faced with new and continuing challenges in 2015.  The law suit over the undergrounding debacle has yet to be resolved.  Prioritizing expenditures and implementing approved programs and policies will be ongoing.

Nov 30 2014

At the November 17 City Council meeting, Piedmont came into compliance with State of California conflict of interest laws.  All council members present voted to approve the revised policy.  Although a biannual Council review is required by State law, the Council had not reviewed the City policy since 1988.

After considerable discussion, the Piedmont Police and Fire Pension Board members and the City Engineer were added to the list of those required to provide personal economic disclosure on Form 700.  Vice Mayor Jeff Weiler objected to Council member Tim Rood’s suggestion of requiring Piedmont’s consulting City Engineer to be named on the list, because he felt it was unnecessary and an invasion of privacy. When the votes were cast, Weiler voted aye along with the other approving council members, while noting his objections.

The consulting City Engineer has previously been voluntarily providing his financial disclosure information to the City. The City Engineer is charged with the evaluation and oversight of public works projects including contracts, design and construction.

Newly added to the list was the Piedmont Police and Fire Pension Board, responsible for overseeing distribution of retiree benefits, investment of pension fund assets and post employment benefits investments by Osterweis Capital Management.  The assets are valued at tens of millions of dollars.

A question arose regarding application of economic disclosure requirements for specific appointed committees and commissions who interview and advise on auditors, contractors, consultants, bond underwriters, etc. The Acting City Attorney provided advice that the disclosure was not necessary as those appointed bodies did not make the final decision on selection of providers.  In recent years, it has been the practice of the City Council to approve committee and commission recommendations on various providers.

The City Council and Planning Commission along with certain employees have historically been complying with State economic disclosure laws in filing Form 700.

Financial disclosure is intended to alert the public, legal authorities and Fair Political Practices boards to personal interests that might be affected while appointed or elected officials are performing their official duties (i.e., making governmental decisions). Government Code 87500 identifies elected and appointed officials who are required to file Form 700, the Statement of Economic Interests.

Information disclosed can include:

  • Investments in business entities (e.g., stock holdings, owning a business, a partnership)
  • Interests in real estate (real property)
  • Sources of personal income, including gifts, loans and travel payments
  • Positions of management or employment with business entities

The form is required to be filed annually. Filed forms are public documents, available to anyone who requests them.

Read more about Form 700 here.

After the failed private undergrounding utility project costing Piedmont taxpayers over $2 million, the City Council in an attempt to avoid conflicts of interests adopted new policies and procedures for large public works projects.

Legal resolution to determine fault of the costly undergrounding debacle has yet to be resolved despite years of litigation.   Fault is pivoting around the City Council, City employees, contractors, engineers, and legal counsel. The majority of the participating Piedmont employees and City Council members involved in the problematic private utility project are no longer in their positions. There has been no announcement regarding final resolution of the pending litigation.

Oct 5 2014

On October 6 the City Council will consider transferring funds into the Sewer Fund to move forward with completing the mainline sewer rehabilitation. This is a significant first in Piedmont, to have funds transferred into the Sewer Fund rather than taken out. The Sewer Fund has essentially operated as a City slush fund.

In 2011, City Hall asked for an additional $11 Million dollars from taxpayers which would have added an additional 50% tax burden on top of an already expensive sewer tax. That 2011 tax failed, and earlier this year staff estimated only $1 Million was needed to complete the previously stated $11M compliance and construction work.

Piedmont has always maintained compliance with all EPA and Water Resources Quality Board legal requirements. A fair question is why $11 Million was needed 3 years ago, and is now down to $1M? Fortuitously, a real estate transfer tax windfall of an additional $1M, and other cost cuts, means no additional taxpayer money is needed to complete the mainline sewer system. Most of the Council also recognized when rescinding Mr. Wieler’s transfer tax plan earlier this year that taxpayers want more accountability of where their tax dollars will go, and an efficient use of their funds.

During the very troubled Piedmont Hill Underground Utility District debacle, with taxpayers paying in excess of two million dollars for private benefit, the Crest Road utility trench collapsed on Oct. 13 2009. The trench would not have existed but for the private benefit undergrounding project. Staff recommended on Nov. 16 2009 that $296,000 be taken from the Sewer Fund for repairs; the sewer fund is a publicly funded source. Council agreed. Staff stated a month after the collapse that installation of trench dams was the necessary repair. On Oct. 14 2009, the City Engineer directed that the trench be filled with low-pressure concrete; by Nov. 16 this was largely completed. The installation of the trench dams, standard construction practice on a steep slope and missing in the original construction, would have required that hundreds of cubic yards of the freshly poured cement be excavated. No trench dams were ever installed and the $296,000 was paid by general tax revenue and not taken from the private undergrounding district’s contingency funds.

Perhaps just a coincidence, but at the time the 2011 sewer tax failed the Blair Park project was pulled. The actual expenses for that project were never fully disclosed and I question how the sewer fund would have been further used had the additional tax passed. I speculate that the overflowing sewer fund may have been a source of funding for the new 25 home sewer line and 24 inch EBMUD transmission line relocation.

The current temporary transfer into the Sewer Fund makes sense; it is essentially a near zero interest loan. Hopefully, when the sewer rehabilitation is completed, the same spirit as now prevails in City Hall will remain and the sewer tax enacted in 2000 will be eliminated. Other prudent accounting practices have recently been undertaken with a closer look at the $900,000 automatically appropriated annually from the Sewer Fund and moved into the General Fund.

Moving ahead now with Phase V of the sewer rehabilitation is smart. Finally under Mayor Fujioka’s forward looking leadership and coupled with the transparent professionalism of City Administrator Benoit, we are taking financially prudent proactive measures.

Rich Schiller, Piedmont Resident

Editors’ Note: The opinions expressed are those of the author and not necessarily those of the Piedmont Civic Association.
Jun 23 2014

Years have passed and there remains no resolution to issues surrounding the undergrounding debacle costing Piedmont taxpayers over $2 million. The City has filed law suits against the City’s engineers in an attempt to recover the lost millions. “The Court has ordered the parties to engage in settlement discussions, and a mediation likely will be scheduled this summer.” Attorneys representing the City, Lombardi, Loper and Conant, LLP, “anticipate that the trial date ultimately will be in Spring 2015.

The following information is from the City:

The City of Piedmont’s case against Robert Gray & Associates and Harris & Associates, Inc. currently is in the pre-trial phase of litigation known as “discovery.”  The parties have been exchanging written information and documents, and have completed multiple key depositions.  Attorneys representing the City expect to complete all necessary depositions and written discovery in the next few months.

The Court has ordered the parties to engage in settlement discussions, and a mediation likely will be scheduled this summer.  While the Court has not yet set a trial date, attorneys for the City anticipate that the trial date ultimately will be in Spring 2015.

Following direction from the City Council, the following documents have been posted related to the civil suit against the engineers for the Piedmont Hills Underground Assessment District.  Click on each item to see the full document:

More information on the case is available from the Superior Court of California, County of Contra Costa, My Court Case web site. On March 21, 2013, the California Court of Appeal sided with the City of Piedmont in a procedural motion in its suit against the two engineering firms who designed the Piedmont Hills Undergrounding Assessment District. The Court of Appeal upheld a lower court ruling that the City’s filing of its suit in Superior Court was indeed proper and that arbitration was not mandated by the City’s contract with its engineers. The case will now go back to Superior Court and will be tried on its merits. No trial date has been set.

Jun 20 2014

Council might back off of a tax measure for new money to fix sewers.

Recent information from Alameda County  shows an unprecedented increase in the Real Property Transfer Tax flowing into Piedmont’s budget causing the City Administrator and Council to take another look at placing a sewer tax measure on the November 2014 ballot.  The City has been considering a ballot measure to generate new money derived from an increase in the tax on real estate transfers. For cost effectiveness and water quality, the City seeks to expedite the 30% remaining of the sanitary sewer rehabilitation  program.

The matter will be considered at a Special Meeting of the City Council in the Council Chambers on Tuesday, June 24 starting at 7:30 p.m. The meeting, open to the public, will be broadcast on KCOM Channel 27 and available live streamed from the City’s website.

“At the June 2nd meeting, the staff report for the first public hearing on the 2014-15 Budget included an update to Real Property Transfer Tax (RPTT) receipts. Based on the information provided by Alameda County through May 15, 2014, the City was estimated to receive
approximately $2.95 million and on pace to have a record year. At that time, staff continued to propose that funds in excess of budgeted amounts be allocated for unfunded retiree medical liabilities, facilities maintenance, and equipment replacement.

Based upon receipt of new data provided by the Alameda County Assessor’s Office, FY 2013-14 will be unprecedented, with RPTT receipts through June 9th at $3.78 million. This is largely due
to an historic total of approximately $972,000 for the month of May. The total for May is only $43,000 less than what the City received for April through June combined for Fiscal Year 2012-13. The previous record for a single month of transfer tax was June 2006, with receipts of $694,840.”

City Administrator Paul Benoit’s Report to the Council

The voter approved Sewer Fund originally was intended to rebuild and maintain Piedmont’s sanitary sewer system, however it was soon changed to include the City’s storm drain system. Both systems are recognized as important to protecting waterways from damaging effluent.

Historically, the City has used excess General Funds for purposes other than sewers: beautification projects, recreation facilities, employee compensation,  $2.5 million for private undergrounding problems, etc.

The City Council offered a 2011 ballot measure to complete the remaining 30% of the aged sanitary sewers. The tax proposed would have essentially doubled property owners ‘ Sewer Fund Taxes from $471 to $849  and $707 to $1,274 depending on lot size. Piedmont voters rejected the tax increase when they learned of errors in the City’s cost estimates and incorrect statements on Environmental Protection Agency (EPA) requirements.  Supporters of the sewer tax were undeterred by the new information and continued to support the sewer ballot measure that would have provided the City with new funds of approximately $11 million.

In a recent turn around on how much money was needed to accomplish EPA requirements, the City reduced the needed amount from approximately $11 million to approximately $1 million. City explanations of the dramatic change in needed funds to complete the sewer rehabilitation included overstated and incorrect calculations.

For years records were not kept by the Public Works Department on specific work hours or various projects charged to the Sewer Fund.  Council members did not have information on the actual work charged the Sewer Fund.

A priority list weighing various uses, including sewers, with available City funds has not been produced by the Council.

Former Mayor Al Peters stated in an opinion:

“The City has an annual general fund budget of approximately $22 million.  Allocating two percent a year to this project for three years would produce over $1.3 million.  As of June 30, 2013, the City had over $10 million in reserves, including over $4 million undesignated and an additional $4 million set aside for capital improvements and equipment replacement.  Why not use a portion of these funds to loan to the Sewer Fund rather than requesting an additional tax?  If reserves are inadequate, the Council should address that issue in a comprehensive way, not by this piecemeal approach.”

As the City looks for new money for sewers, it places other projects ahead of sewers.

Capital Improve Project (CIP) funds are generally used for special projects. There is no information indicating the City  prioritizes projects based on unavoidable expenses such as the completion of EPA required sewer work.

Although CIP funds and General Funds can be used for sewers, it is unknown if CIP allocations for sewer projects will be considered by the City Council.  As of this writing, the significant infusion of funds supplied by the Real Estate Transfer Tax changes the budget numbers. Without a new sewer tax, it appears special projects could be implemented and the Sewer Fund could be provided with the funds necessary for renovation of the remaining sanitary sewers in a cost effective, expeditious manner.

To read detailed analysis on Piedmont’s Sewer Fund, go to the left side of this page and click on “Sewer Fund”.

Read the City Administrator’s Report to the Council